How The 2025 Autumn Budget Makes Salary Sacrifice Car Schemes More Valuable Than Ever

The 2025 Autumn Budget has raised many questions, with employees set to feel its impact. Frozen tax bands, reduced savings allowances, and take-home pay not working as hard as it should are prominent concerns.

• UK employees will feel the pinch due to tax freezes

• The workforce will need a benefit that can help save money — Employee Car Benefit Schemes provide this

The decision to extend the freeze on income tax thresholds will pull many workers into higher tax bands without them truly seeing a pay rise. Even modest salary increases could push employees into a disproportionate tax position.

• More employees will end up in a higher tax band without a real pay increase

• Incremental pay rises could push people into higher bands

What’s the smart play? Employees must make every pound they earn work harder. Topping up a pension or ISA may not deliver the returns it once did.

And here’s why:

• From April 2027, the Cash ISA limit drops from £20k to £12k

• From 2029, pension salary sacrifice will be capped at £2k per year

In simple terms, employees’ money will not work as hard as it once did — and they shouldn’t settle for that. This all points towards finding a smarter solution.

As the UK government reduces relief through traditional saving methods, Employee Car Benefit Schemes remain unaffected. Now is the time to consider introducing or enhancing a scheme to truly deliver value for employees.

Right now, employees can save up to 40% off their next car, while employers can reduce National Insurance contributions — making their money work harder through a well-structured Employee Car Benefit Scheme.

What else did we learn from the 2025 Autumn Budget?

Expensive Car Supplement to increase to £50,000+

There is an element of doom and gloom around the budget, but not all is negative. From April 2026, the Expensive Car Supplement threshold will rise from £40,000 to £50,000 — potentially creating savings of nearly £3,000 on a new EV.

• Threshold rises from £40k to £50k in 2026 — more EVs avoid the £425 annual charge

• Salary sacrifice drivers benefit from lower monthly costs

Electric vehicles that previously attracted the £425 annual charge (from year two to year six of ownership) will now only incur it if their list price exceeds £50,000.
For salary sacrifice drivers, this means lower monthly costs and even greater total savings.

EV Pence-per-Mile Tax from April 2028

The long-discussed introduction of a pence-per-mile road tax for EVs in 2028 could act as a barrier to EV adoption, according to industry sentiment.

• A per-mile tax is coming — but not until 2028

• Benefit-in-Kind remains very low, keeping EVs highly cost-effective

Despite this, there is a window of opportunity: Benefit-in-Kind rates remain exceptionally low until at least 2028, meaning employees can enjoy enhanced savings for at least the next three years. Those who join a scheme now will benefit most.

Fuel duty has been frozen again — but even so, EVs still prove cheaper to run than ICE equivalents, even with the forthcoming pence-per-mile tax.

ECOS saved — for now

ECOS (Employee Car Ownership Schemes) received a reprieve until 2030. However, businesses offering this scheme should not kick the proverbial can down the road.

• ECOS changes deferred until 2030

• Employers who delay reviewing their approach will feel the impact later

Companies that postpone reviewing their ECOS strategy risk costing their workforce in the medium to long term. Protecting employees with a ready-made solution to transition away from ECOS supports long-term retention.

Making employees’ money work harder in reality

• Rising costs and weaker saving opportunities will drive difficult financial decisions for households

• Employee Car Benefit Schemes through salary sacrifice give employees a way to extract more value from their earnings with an all-inclusive offering

That’s where our Employee Car Benefit Scheme through salary sacrifice comes into its own. It provides a fully-inclusive solution for driving a new car for less while reducing reliance on traditional savings tools.

An employee who uses a portion of their gross salary to drive a new car — with insurance, EV home charger, breakdown cover, accident management, tyres, servicing, and glass replacement included — will see their earnings go further than those who do not take advantage of such a scheme.

Turning part of pay into something tangible and valuable is a smart and effective way to keep employees satisfied and committed to your business.

For employers, this means improved retention, happier teams, ESG benefits through reduced CO₂ emissions, and the potential for reduced NI contributions — putting savings back into the business.

In summary, implementing our Employee Car Benefit Scheme through salary sacrifice gives employers:

• Improved retention and a happier workforce

• CO₂ reductions and potential employer NI savings

• A valuable workplace benefit that delivers value for everyone

Discuss our Employee Car Benefit Scheme through Salary Sacrifice with a member of our team today and get set up in less than a week.